Blindly reaching for the highest historical rate of return without understanding the amount of risk involved can lead to disaster. Managing risk is a key to long-term financial success. We believe that the best way to realize consistent returns over time is to avoid losses of principal during the inevitable periods of decline that all markets experience. But with the price of many investments constantly in flux, how can investors realize the level of gain they want and still protect their investments? Since 1979, BTS has been employing Tactical Asset Allocation as a means of preserving capital during market declines, reducing investment volatility, and producing enhanced investment returns with less risk.

A smart defensive strategy in declining markets is a sell-side discipline. You thereby preserve your capital and potentially avoid a large loss. This strategy positions you to take advantage of opportunities when the market heads back up, by purchasing more shares at a lower price. At any one time, we can be fully invested in the market, taking advantage of market growth – or 100% in cash, protecting your principal by guarding against potential market decline.

The fallacy of the "buy and hold" strategy of investing is that it assumes you have forever to hold onto your position until the market goes back up. It ignores the fact that in a poor market, when your investment value goes down, your income also drops. If you need income, you may not be able to afford to buy and hold.

Common sense tells us that investing with our emotions is a dangerous strategy. BTS' proprietary modeling is a highly sophisticated tool for spotting market trends, one that produces results removed from human bias and subjectivity.

Using sophisticated, analytical modeling techniques to identify intermediate to long-term market trends, we try to be in the market for 75% to 85% of an uptrend, and out of the market for 75% to 85% of a downtrend. This approach, if successful, has the effect of reducing the volatility and "smoothing out" the road to your investment goals.

Not all investments can be traded from a tactical standpoint, many have too much or too little volatility to manage effectively. In the late 1970s our founder, Vilis Pasts found an investment that correlated with equities but moved like traditional bonds. High Yield bonds move on the information of the underlying corporation, similar to its equity position. But where the stock would move up or down in minutes and hours, the bond could take days to price accurately. Today, depending on the tactical strategy chosen, you will notice that HY bonds are usually the central theme, however, additional investments are added to either preserve capital or add potential return when HYs are no longer attractive.

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